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Thread: Underperforming Patent Troll Rambus is for sale?

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    Admin Daniel Nenni's Avatar
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    Underperforming Patent Troll Rambus is for sale?

    According to people "familiar" with the matter of course. Since this is mostly a patent play versus an IP or chip company I'm not sure who the bidders would be. Unless of course they split up the company. It seems that Rambus missed out on the semiconductor double digit growth spurt last year (RMBS +2.1%) so this should not be a shock to the financial world:

    Rambus Inc.
    , a chip designer with a lengthy history of patent litigation, is considering a sale even as it has expanded its business to include sales of its own branded chips, people familiar with the matter said...

    Chip Firm Rambus Is Working With an Adviser to Pursue a Sale - Bloomberg

    I have not heard of activist investors or an unruly board member that sometimes precedes something like this. The story just broke so we will see how this unfolds but I'm sure there is more to this story. The current RMBS market value is $1.4B, and given the patent, IP, and chip business mix I see this as a difficult sale. If you know anything more let me know...

    Here is my favorite "say what?" media quote thus far:

    Rambus is facing ever-increasing competition from the likes of Semiconductor Manufacturing International Corp. SMI and Advanced Micro Devices AMD. Customer concentration remains headwinds for the company. This practice is limiting Rambus’ growth prospects and profitability.


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    I don't see their IP being worth that much, since many of their IP claims have either been thrown out or resolved via licensing. It might be that the licensing revenue is expected to decline going forward and investors don't see a path to growth so would rather cash out now. I don't really see a fit anywhere except maybe another patent troll that would like to try asserting more aggressively, but that seems unlikely given that RAMBUS was already very aggressive in asserting to the point of getting in legal trouble themselves.

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    Admin Daniel Nenni's Avatar
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    Quote Originally Posted by count View Post
    I don't see their IP being worth that much, since many of their IP claims have either been thrown out or resolved via licensing. It might be that the licensing revenue is expected to decline going forward and investors don't see a path to growth so would rather cash out now. I don't really see a fit anywhere except maybe another patent troll that would like to try asserting more aggressively, but that seems unlikely given that RAMBUS was already very aggressive in asserting to the point of getting in legal trouble themselves.
    I agree. It was very interesting to see Rambus go into the chip business thus competing with their potential IP customers. They do have some good IP which could find a nice home inside Cadence or Synopsys but they would have to split it out from the patents and chips.

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    IP vendors deciding to go in the chip business is interesting, but it's also a kind of malediction as I can't recall any of them being successful. Look at Mosys, selling memory IP, buying a SerDes IP vendor Prism Circuits (before to resale the technology) and eventually selling chips. The tresult of this strategy is net losses in 2012, 2013, 2014, 2015, 2016 and 2017! Back in 2004, Synopsys was ready to pay $350 million to acquire MoSys, I don't know what is MoSys value today, but certainly not as high as $350 million!

    Apparently, selling IC instead of IP is perceived as a move forward, but from a pure business perspective, it can destroy company value like in the MoSys case.

    Now, if we look at Rambus, the company revenue in 2016 was $336 million:
    - 73% for patent license
    - 6% for technology license
    - 21% for product (IC) sales + services revenues (including IP license, software, etc.)

    When the historical patents will vanish, it's probably 3/4 of Rambus revenues which will disappear (to be verified). IPnest evaluation of the "traditionnal" IP business was $32.2 million in 2016 for Rambus, putting them at the #8 position of the pure IP license and royalty market (not patent or technology).

    Moving from a pure IP¨player to an IP + IC vendor is certainly attractive, but I am not sure that's a good idea!

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